'We'll Come Out With Mass Market Models Next Year' - VinFast Asia Head Pham Sanh Chau
The Vietnamese electric car maker says it will start with its premium models during the festive season this year, following up with mass market models the following year.
In a detailed discussion about VinFast's India strategy, Pham Sanh Chau, MD and CEO of the company's Asia operations, outlines the carmaker's ambitious plans for India. With the construction of the Tamil Nadu plant on schedule despite recent floods, the Vietnamese EV manufacturer is targeting a festive season launch with their VF7 model. The company plans to start with CKD operations and 50,000-unit capacity, eventually scaling up to 150,000 units while expanding their portfolio from premium to mass-market segments.
What is the current status of the construction of your Tamil Nadu plant?
At the moment the construction of the plant is on schedule but we are trying to expedite it, our company here cannot move as fast as us, but hopefully we will launch in the second half of this year and have the car to offer before the festive season. We broke ground on February 25 last year and in these 10 months, there has been good progress despite the floods that Tamil Nadu has had since then, so I am optimistic.
What is the level of localisation you will start with and will this increase over time?
We plan to start with CKD operations and so that means body shop, paint shop and assembly. We have begun work with local suppliers and we are still looking at more, because obviously we want to maximise the local content. And it’s not because we want to apply for any scheme, but simply because we want to reduce the BoM (Bill of Materials) costs and that reduces the tax too. Also, in terms of production, we will start with a capacity of 50,000 units and will increase that to 1,50,000 units in time.
What is your product launch plan and what products can the planned production support?
We are launching the VF7 first which is the premium model in the mid-segment. We have the VF 8 and VF 9 which are the top models ,and they sell well in Vietnam, North America, Middle East and the EU too but for India we have tried to bring in the highest model in the mid-premium space, as the target is the high-end customer in the middle-class. After that we will launch the VF6 and then come down to the VF3. The 50,000 capacity can have multiple combinations of products which are ready for right hand drive, so if required it can support products like VF3, VF5 and e34 too.
Will you import CBUs under the new EV policy that allows for lower rates?
That policy has not yet been rolled out and strictly speaking we are no longer eligible, because we are a brown field project. However, we were among the first OEMs to discuss that scheme and we moved faster than the government, so they are trying to figure out how they can support us and give us some incentives, since we did bring in investments into India. So, the discussion is going on and there is no final call on the CBUs.
What is the plan for the localisation of the EV batteries that you will use?
We have three battery factories in Vietnam and for some models, we supply the batteries from our own plants, for other models we have tie-up with foreign companies, and for others we buy the batteries outright. For India, this is important and we are in negotiations with some potential partners for both cells and pack and if we are able to get the battery made here we will automatically reach about 30 to 40% of localisation.
How do you plan to differentiate yourself and build brand awareness?
We would like to leverage the brand of our parent company Vingroup. It’s the biggest private conglomerate in Vietnam, involved in many diverse businesses, it’s like Tata in India. So, before we introduce who we are (VinFast), we also want to introduce who the parents are (Vingroup), and talk of the other businesses and how successful they are. Also, on average we have half a million people coming to Vietnam so they experience the VinGroup name in our hotels, shopping malls and of course all the cars.
What is your network plan to address a large and diverse market like India?
The idea is to bring the VF7 in the affordable premium segment and follow it up quickly with the VF6. We want to have a wider customer base and then grow further still with the mass segments at the lower prices where the maximum traction takes place. So, the dealer spread will also grow, but at the start, we will focus on markets that are already buying EVs for instance we may even delay large markets like Punjab because they are not buying EVs right now.
What can customers expect when they come to your dealerships?
We will have a phygital model, and importantly for dealers we will ensure that they will not incur OPEX (operating expense) loss for the next five to six months and then with the mass segment product coming next year, they will see recovery quickly. In terms of setup, dealership will be adequate and not unnecessarily extravagant. After all, customers know that the expense comes at a cost to them only, so our focus will be on high manpower and service quality.
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